Chapter content - Free access

Abstract

Market access for pharmaceuticals in Germany differs from the systems implemented and followed in many other countries in that there is no pricing and reimbursement approval required when launching a new pharmaceutical.

This, however, does not mean that pharmaceutical companies are completely free to charge any price they deem appropriate for their products (either existing or new pharmaceuticals). Quite the contrary, there are a number of mechanisms which directly or indirectly regulate prices or contribute to cost savings in the healthcare system. These mechanisms range from price-freezing, to compulsory rebates, reference prices limiting the reimbursement amount, and negotiated reimbursement prices for new pharmaceuticals, which kick in one year after product launch under Germany’s Pharmaceuticals Market Reorganisation Act (Arzneimittelmarkt Neuordnungsgesetz or ‘AMNOG’). The AMNOG process was implemented in 2011 and is the key price-regulation mechanism for innovative pharmaceuticals.

The AMNOG process comprises two phases, starting with a health technology assessment (‘HTA’) conducted by Germany’s Federal Joint Committee (Gemeinsamer Bundesausschuss or G-BA), followed by the reimbursement price negotiations between the Association of Statutory Health Insurance Funds (‘GKV-SV’) and the respective pharmaceutical company. The negotiated reimbursement price applies as of the 13th month after the initial product launch of the new pharmaceutical in Germany. If no agreement can be reached, the reimbursement price will be determined by an arbitration committee and will be equally applicable as of the 13th month after product launch.

The AMNOG process has fundamentally changed the market access regime in Germany and is therefore seen as something of a learning curve. While statutory health insurance funds (‘SHIs’) and the German government regard the AMNOG system as successful overall, the pharmaceutical industry is still raising numerous concerns pertaining to: (i) a relatively high number of negative assessments; (ii) data requirements which cannot be fulfilled in the early stages of product launch; (iii) undue pressure on prices by choosing generic comparators as a reference point for ‘bottom-up’ price negotiations; and (iv) an unbalanced governance structure which gives the GKV-SV the combined power of first influencing the additional benefit assessment conducted by the G-BA, and then negotiating reimbursement price negotiations with the respective pharmaceutical company.

Against this background, successful market access in Germany requires careful preparation, which should be initiated as early as possible. The design of pivotal trials should be structured in close collaboration with market access experts, to anticipate requirements for the additional benefit assessment. Moreover, close collaboration with medical experts is needed in order to determine and justify the appropriate comparator for the AMNOG process.

Finally, legal advice should also be sought at an early stage because a subsequent judicial review of the substance of the decisions under the AMNOG process is possible only within certain procedural limits.

Market introduction

Germany currently has 82.2 million residents, who have access to free healthcare services based on a statutorily funded system, currently operating around 110 SHIs, which cover approx. 90% of the German population. The premiums of the SHI, levied as a percentage of gross wages up to a maximum level, are shared between the employee and the employer. Non-earning dependants of SHI members, e.g. children, are covered free of charge. Premiums of unemployed people are borne by social security.

The SHI’s premiums are centrally pooled and reallocated to individual SHIs using a risk-adjusted capitation formula, taking into account age, sex, and morbidity from 80 chronic and/or serious illnesses. The SHI system is based on the principle of solidarity, meaning that all members jointly carry the individual risk of the costs of treatments in case of illness. Every member of the SHI, regardless of their income level, has an equal right to medical treatment and continued payment of wages in case of illness.

The remaining 10% of the German population are covered by private insurance, access to which is limited by a minimum income level (except for civil servants and public-sector employees, who can top up their specific health insurance regime with private insurance regardless of their income level).

Health expenditure

Total health expenditure in Germany in 2017 reached €374 billion (approx. 11% of GDP), 33% of which was spent on in-patient treatment, 17% on out-patient treatment, 17% on pharmaceuticals, and the remaining 33% on additional services and/or administration. SHIs spent around €178.7 billion in the first three quarters of 2018, generating a surplus of €1.86 billion.

As to pharmaceuticals, approx. 10% of the total health expenditure is spent on generic products, and 7% relates to patent-protected products.

In 2018, 36 pharmaceuticals (excluding biosimilar) with new active substances were launched in Germany. Twelve of them are licensed for the treatment of cancer; ten for metabolic diseases; and 15 for orphan diseases. The launch of 36 pharmaceuticals with new active substances is remarkable high and exceeds the ten-year average of 32 launches. As to the incidence and prevalence of diseases, cardiovascular diseases are amongst the most frequent causes of death in Germany (approx. 40%), followed by cancer (25%).

Taking into account the demographic change, health expenditures will significantly increase due to the ageing population and population decline in Germany. Based on current calculations, by 2060, every third resident will be 65 years or older.

Key market players

There are various players in the market that participate in self-governing decision-making processes, while the legislator sets out the overall conditions and criteria for healthcare services.

The Federal Ministry of Health (‘BMG’) is the competent federal authority for all health-related policy issues. The Federal Institute for Pharmaceuticals and Medical Devices (‘BfArM’) is an independent federal department within the BMG. Its main responsibility is to conduct the marketing authorisation process for pharmaceuticals in national proceedings.

Federal Joint Committee (G-BA)

The most important self-governing body is the G-BA. The G-BA is a public legal entity comprising the leading umbrella organisations, namely the associations of physicians and dentists, the hospital federation, and the federal association of SHIs. In addition, patient representatives can participate in all sessions, albeit with no voting rights.

The legal basis of G-BA operations is the No. 5 Book of the German Social Code, which defines and specifies the competences of the G-BA. The G-BA is under the statutory supervision of the BMG. Resolutions and directives passed by the G-BA are reviewed by the Federal Ministry of Health, and published if no objections are made. The directives enacted by the G-BA are legally binding on third parties as subordinate regulations. Thereby, they apply to the GKV-SV, individual patients, responsible physicians and dentists and any other service provider within the SHI system.

Institute for Quality and Efficiency in Healthcare

The Institute for Quality and Efficiency in Healthcare (‘IQWiG’) is an independent HTA institution. Amongst other responsibilities, it evaluates the effectiveness and/or cost-effectiveness of pharmaceuticals, either at the request of the G-BA or, in exceptional cases, on its own initiative. Its assessments are non-binding on the G-BA, but are presumed to be scientifically correct by the German social courts.

Federal Association of SHIs

The Federal Association of SHIs (‘GKV-SV’) is the federal level association of all SHIs. Members of the GKV-SV are represented in the G-BA and can thereby influence its decision-making process. As regards pharmaceuticals with new active pharmaceutical ingredients (‘APIs’), the GKV-SV is also the contractual party negotiating and concluding agreements on reimbursement prices with the respective pharmaceutical companies.

Associations of pharmaceutical companies

The pharmaceutical industry is primarily represented and organised by four associations, namely: the association of research-based pharmaceutical companies (‘VFA’); the federal association of the pharmaceutical industry (‘BPI’), which also represents medium-sized pharmaceutical companies; the federal association of pharmaceutical manufacturers (‘BAH’), which represents prescription (‘RX’) and over-the-counter (‘OTC’) companies; and Pro Generika, which represents generic companies only.

Pharmaceutical pricing and reimbursement

As a general rule, all patients covered by the SHI are entitled to adequate treatment of diseases, including the administration of pharmaceuticals. The SHI system is based on the principle of providing benefits in kind. This means that patients do not have to pay for medical treatment themselves in the first place and then seek reimbursement from their individual SHI. Instead, patients receive the medical treatment in kind, including pharmaceuticals, without making any of their own payments (except for statutorily regulated co-payments), and the SHI then reimburses the pharmacists.

The right to treatments with pharmaceuticals generally covers all pharmaceuticals available on the market, i.e. all products with a valid marketing authorisation in place. Unlike systems in many other countries, the patient’s access to the treatment with a pharmaceutical is not dependent on any further approval of pricing and reimbursement (i.e. there is no so-called ‘fourth hurdle’). Nevertheless, this right is subject to certain restrictions.

Restrictions on patient’s right to treatment with pharmaceuticals

Exclusion of OTC products from reimbursement

First, non-prescription pharmaceuticals are generally excluded from reimbursement. Thus, this limits patients’ right to treatment with pharmaceuticals. Patients requiring these non-prescription pharmaceuticals must purchase them at their own expense.

There are only two exceptions to this general rule, pertaining to: children under 12 years old or adolescents under 18 years old with developmental disorders; and specific OTC pharmaceuticals which are recognised as standard treatment for severe diseases. In these scenarios, patients will receive the products from pharmacies without making any payment of their own (except for statutorily regulated co-payments).

Second, pharmaceuticals licensed for the treatment of minor diseases (so-called ‘trifle pharmaceuticals’) are likewise excluded from reimbursement. The same applies to ‘lifestyle pharmaceuticals’ which are not designed to treat diseases but simply to improve the quality of life (e.g. pharmaceuticals licensed for the treatment of erectile dysfunction, smoking cessation or body-weight control).

Restrictions by G-BA Guidelines

In addition, the G-BA has the right to exclude or restrict the reimbursement of pharmaceuticals by way of guidelines or therapeutic recommendations. In this case, the respective pharmaceuticals may only be prescribed at the expense of the patient’s SHI on the basis of explicit justification of specific medical reasons by the physician. Conversely, in the absence of a justification for medical reasons, the patient must purchase the product at their own expense.

The G-BA may restrict or limit reimbursement of pharmaceuticals on the grounds that the therapeutic benefit, medical necessity or cost-effectiveness of the product cannot be established, or that a more cost-effective treatment with equivalent therapeutic benefit is available. In this respect, it should be noted that the burden of proof for the lack of therapeutic benefit or the lack of cost-effectiveness is with the G-BA. Moreover, when assessing the therapeutic benefit and medical necessity of a pharmaceutical, the G-BA must not contradict the findings and assessments made by the competent regulatory authority, which has granted the marketing authorisation (i.e. BfArM). Finally, restrictions or exclusions of reimbursement are considered as an ‘ultima ratio’ tool, and can only be determined if cost-effectiveness cannot be established by other price regulation mechanisms.

Price regulation mechanisms for pharmaceuticals

In the absence of a fourth hurdle, pharmaceutical companies may, in general, freely determine market prices when launching their products. However, there are various mechanisms which directly or indirectly regulate prices or contribute to cost-savings in the healthcare system. These price regulation mechanisms range from price-freezing to compulsory rebates, reference prices limiting the reimbursement amount (incurring co-payment obligations by patients), and negotiated reimbursement prices for new pharmaceuticals.

Mandatory rebates/price freezing

The following rebates must be granted by the pharmaceutical companies:

• general rebate of 7% of the manufacturer’s price to be paid by the pharmaceutical companies to the SHIs for all pharmaceuticals which are not subject to a more specific price regulation;

• special rebate of 10% of the manufacturer’s price to be paid by the pharmaceutical companies to the SHIs for generics;

• special rebates for vaccines to be paid by the pharmaceutical companies to the SHIs which are calculated on the basis of actual average prices in the four Member States of the EU with gross national incomes coming closest to the German one; and

• price-freezing until end of 2022 for all pharmaceuticals launched before 1st August 2009.

Reference price system

Another important price regulation mechanism covering the vast majority of pharmaceuticals is the reference price system which was introduced in 1989. In 2017, 81% of all prescriptions issued for treatments with pharmaceuticals referred to products regulated by the reference price system, thereby covering 37% of the overall expenditures by the SHIs for pharmaceuticals.

Under the reference price regulation, pharmaceuticals are allocated to specific ‘reference price groups’. These groups can be established on the basis of: (i) products having the same API; (ii) products having pharmacological or therapeutically comparable APIs; or (iii) products having comparable therapeutic effects, including combination products consisting of more than one API. These reference groups are established by the G-BA and can also combine generic and patent-protected products. Patent-protected products can only be exempted from the reference price system if a pharmaceutical company can prove that such product has an additional therapeutic benefit compared to other pharmaceuticals of the same group. This additional therapeutic benefit must generally be established on the basis of RCT, including head-to-head studies with relevant patient end-points, including mortality, morbidity and quality of life.

Once the G-BA has established the reference price groups and defined the comparative figures to calculate the prices, the GKV-SV determines the reference prices for all products belonging to the same reference group. As a general principle, the reference prices must be set at a level ensuring a sufficient, cost-effective, quality-assured and appropriate treatment of patients.

The reference price allocated to a product constitutes the maximum amount of reimbursement to be paid to the pharmacist by the SHI. Therefore, if the market price of the pharmaceutical exceeds the applicable reference price, the patient will need to make a corresponding co-payment to the pharmacist. To avoid these co-payments, a patient will usually ask the physician to prescribe a product of the same reference group with a market price available below or equal to the reference price. Therefore, in most cases, pharmaceutical companies lower their market prices to the respective reference price to avoid this substitution by prescription of competing products.

AMNOG process for innovative pharmaceuticals

While the reference price system has proven to be quite effective in regulating pricing and reimbursement for established products, the situation is different for new and innovative products. As a matter of fact, reference groups can only be built if a minimum number of comparable pharmaceuticals are already available on the market. If, however, a new product with a new pharmacological mode of action enters the market, it is often difficult to include such product in an existing reference price group or to build a new reference price group.

Against this background, in 2011, the German legislator decided to introduce a new price regulation scheme, the so-called ‘AMNOG process’ (see above). The AMNOG process generally applies to all pharmaceuticals with new APIs, and consists of a two-step process, namely: first, an HTA assessment conducted by the G-BA; which is followed, secondly, by price negotiations between GKV-SV and the respective pharmaceutical company.

Beyond that, since 2017 a marketing authorisation has also been granted for those pharmaceuticals subject to the AMNOG process which consist of established APIs enjoying the protection of clinical data. The underlying rationale was to cover situations such as with the established API Alemtuzumab, for which a new indication covering multiple sclerosis was granted. However, The AMNOG process does not apply to pharmaceuticals that are likely to cause only minor expenses to be borne by SHIs. Manufacturers of such pharmaceuticals may request release from the process, which is granted by the G-BA.

The G-BA has assessed the threshold in this context to €1 million. In the recent past, there had been discussions on the question of whether expenses incurred in the in-patient sector were included in the €1 million threshold. Against this background, the legislator clarified that not only expenses generated by panel doctors must be included in the calculation process, but also those in the inpatient sector, as these expenses must be borne by SHIs as well.

HTA process

The AMNOG process does not change the general principle that pharmaceutical companies remain free to determine the launch price for innovative pharmaceuticals. Upon launch, however, they are obliged to submit a dossier to the G-BA in order to establish the cost-effectiveness of the new pharmaceutical. The G-BA then conducts a comprehensive HTA as to the so-called product’s ‘additional therapeutic benefit’ in comparison to recognised standard therapies (‘additional benefit assessment’). To this end, the G-BA usually engages the IQWiG, which is charged with the scientific assessment of the dossier.

Once the IQWiG has completed its scientific assessment, the G-BA takes a final decision within six months. This decision contains the final rating of the additional therapeutic benefit of the relevant pharmaceutical with respect to the selected comparator. The additional therapeutic benefit must be specified across a range of different levels. While level 1 reflects an extensive additional benefit over the defined comparator, level 6 is equal to a ‘negative additional benefit’. Moreover, the G-BA also states the level of evidence by which such benefit is established. Again, these levels of evidence cover a broad range, including a proof of an additional therapeutic benefit as well as a mere indicator.

If no additional therapeutic benefit can be established, the respective pharmaceutical shall be allocated to an existing reference price group, if possible. If a suitable reference group neither exists nor can be established, the reimbursement price will be negotiated between the GKV-SV and the pharmaceutical company. However, the negotiated reimbursement price must generally not exceed the annual costs of treatment of the comparator, unless specific circumstances justify a higher reimbursement price.

Reimbursement price negotiations

Following the additional benefit assessment by the G-BA, pharmaceutical companies enter into price negotiations with the GKV-SV. These negotiations shall conclude with a reimbursement price agreement agreed between the parties, the most important provision of this agreement being the reimbursement price. Other provisions of this agreement usually refer to volume discounts, replacement of mandatory rebates, termination rights, etc. The conclusion of this agreement shall occur within a period of six months after the publication of the G-BA’s resolution. If the parties cannot reach an agreement, an arbitration process is triggered.

For pharmaceuticals for which an additional therapeutic benefit has been acknowledged, the price negotiations must take into account various criteria, the most important being the G-BA’s assessment on the level and evidence of the additional therapeutic benefit. In addition, the actual costs for the pharmaceutical in other EU Member States shall be considered as well as the annual therapeutic costs of comparable pharmaceuticals. Generally, there is no strict algorithm to be followed when determining the reimbursement price. In practice, however, the SHI pursues a ‘bottom-up’ approach based on the costs of the defined comparator and a ‘premium’ for the innovative product reflecting its additional therapeutic benefit. In contrast, pharmaceutical companies try to pursue a ‘top-down’ approach, using the launch price as a starting point, and offering a respective rebate, taking into account the G-BA assessment as well as all other, legally applicable criteria.

The negotiated reimbursement price applies to all pharmaceuticals containing the same new API. Thus, if a different pharmaceutical company launches another product with the same new API after the first launch, the reimbursement price agreed with the pharmaceutical company having launched the first product containing this API applies to this other product (and all subsequent products) too.

Reimbursement price agreements can be terminated, at the earliest, one year after signing. However, in case of a new additional benefit assessment by the G-BA, a prior termination is possible. In case of a termination, the formerly agreed reimbursement price remains temporarily in place until an agreement on the new reimbursement price is reached, which will be applied retroactively as of the effective termination date of the old agreement. The statutory time period for the conclusion of a new agreement is six months, otherwise the arbitration process will be triggered.

Arbitration procedure

If no reimbursement price agreement can be reached within the statutory period of six months, an arbitration committee shall determine over a period of three months those elements of the reimbursement price agreement on which the original parties had been unable to reach a consensus. The arbitration committee is composed of representatives of the GKV-SV and the respective associations of the pharmaceutical companies. It is further composed of three impartial permanent members, as well as two further members of each party. This arbitration procedure is technically an administrative procedure. The arbitration committee is bound by the legal criteria set out under the German social law system but enjoys broad discretion when it comes to the actual determination of the reimbursement price.

The reimbursement price which has been either agreed by the parties or set by the arbitration committee will be applicable with retroactive effect as of the 13th month after the initial product launch. Consequently, the pharmaceutical company has a right of free-pricing its product during the first 12 months after its launch. This has been criticised by representatives of the SHI; nevertheless, this petition has not resulted in any change in the current AMNOG system so far.

Special problems: Blended pricing in case of a mixed HTA

When determining the reimbursement price, special attention must be paid to a situation in which an additional therapeutic benefit was accepted by the G-BA assessment for one specific indication of a new product but denied for another indication of the same product.

Theoretically, there could be two different options to determine the reimbursement price in such scenario: First, it could be considered to determine a blended price, which would reflect the fact of superiority in one indication and non-inferiority in the other indication. Alternatively, the price could be set reflecting the additional therapeutical benefit in one indication only. In such scenario, the new product then would have to be excluded from prescription for the other indication for which no superiority has been shown. This is because the prescription of the product with a higher price without showing any additional therapeutical benefit would have to be considered as inefficient and uneconomic for such indication.

To ensure broad access to innovative products in all indications, it had been a standard and well-established practice to agree on blended prices in such scenario. However, very much to the surprise of the industry and the SHI, the Higher Social Court of Berlin-Brandenburg decided in March 2017 against the model of blended pricing. The court held that no blended prices could be determined, if such blended price would exceed the costs of the respective comparator applicable for patients in the indication without additional therapeutic benefit.

However, this decision was revoked by the decision of the Federal Social Court in summer 2018. The Federal Social Court held that blended pricing was a legitimate method to reflect a mixed HTA assessment by the G-BA across indications. Also, the court reinforced the general principle of flexibility and discretion when fixing such blended price either by the parties or the arbitration body, and strongly rejected the concept of a strict algorithm with respect to the costs of a comparable generic treatment.

Judicial review

The decisions by the arbitration committee are subject to judicial review by the higher social court of Berlin-Brandenburg. The courts’ review will be limited to the assessment of whether the arbitration committee has established and considered all relevant facts, followed applicable procedural rules and duly taken into consideration substantive legal criteria. The latter include – in case of a determined additional therapeutic benefit of the product – the additional therapeutic benefit as defined by the G-BA, actual market prices in the EU, as well as annual costs of comparable pharmaceuticals.

The actual derivation and determination of the reimbursement price, as such, however, is only subject to limited judicial review, given that such decision is discretionary in nature and must be based on a subjective assessment of all relevant facts and circumstances of the individual case. Finally, legal proceedings have no automatic suspensive effect so that the reimbursement price set by the arbitration committee will apply with effect from the 13th month after initial product launch unless suspensive effect is exceptionally granted at the request of either party.

Policy issues

The AMNOG process applies to all pharmaceuticals with new APIs, and does not distinguish between different areas of indications or treatments. As such, it is designed to be neutral, being strictly based on the assessment of clinical data. In practice, however, policy issues can indirectly influence the decision-making process, both with a view to cost-containment and control on the one hand, and access to innovative pharmaceuticals on the other.

Main challenges of AMNOG process

Since its implementation, the AMNOG process has been labelled as a learning system by political representatives and other stakeholders. By this notion, it is acknowledged that there is no expectation that the system will work perfectly and smoothly from day one, but that it may need to be adjusted and modified as it evolves in its daily practice. When assessing the experience gained through the AMNOG process since its entry into force in 2011, a number of observations can be made:

High number of negative assessments

The percentage of assessments in which no additional therapeutic benefit could be proven is considerably high (43% of overall 228 assessments by G-BA made between 2011 and 2016). With regard to sub-groups to stratified substances, this percentage increases to 61% and even to 76% with respect to specific patient populations. These figures have been consistently increasing over the past years.

While new pharmaceuticals in the field of oncology have been assigned more positive additional benefit assessments, the results for pharmaceuticals in the fields of diabetes and neurology, which account for almost one-third of all assessments, have been far less positive. In most cases, the absence of an additional therapeutic benefit was not due to a negative assessment of clinical data, but was based on the grounds of a lack of specific data for respective sub-groups. This lack of evidence has triggered criticism from the pharmaceutical industry with regard to the G-BA’s practice of possibly ‘slicing’ patient populations into sub-groups and demanding data which cannot be available at the early stages of market entry of an innovative product.

Determination of low-cost comparators

Further critical comments refer to the insufficient distinction between the G-BA assessment process on the one hand and the reimbursement price negotiation process on the other. As the price negotiations are based, in practice, on the price of the respective comparator (bottom-up approach), the determination of the suitable comparator in the G-BA assessment process is of utmost importance. It is argued by the pharmaceutical industry that the selection of suitable comparators by the G-BA has been biased in a number of cases because of the selection of a generic ‘low-cost comparator’, even though alternative, more innovative and thus more expensive, comparators would have been more appropriate.

It should be noted that the price pressure of low-cost comparators is so strong that almost 90% of the reimbursement prices negotiated or determined by arbitration are below the average price of the same drugs in comparable European countries, and around 60% are even below their lowest prices.

Unbalanced governance

Associated hereto is the question of governance within the G-BA. As a matter of fact, the GKV-SV is able to significantly influence decisions of the G-BA by its own representatives. Thus, under the current system, the GKV-SV is able to influence the substantive basis for the price negotiations, which it then conducts itself.

Transparency of reimbursement prices

Technically, the reimbursement price is determined as a rebate to be granted by the pharmaceutical company to the SHI on the manufacturer’s market price. Contrary to the mandatory rebates, this rebate is not granted directly from the pharmaceutical company to the SHIs but via the distribution channels to wholesalers and pharmacists. Thus, in practice, the reimbursement price lowers the actual market price of the respective pharmaceutical and, as such, is completely transparent and publicly known. Because of this, reimbursement prices under the AMNOG process can have an indirect pricing effect on other markets, which reference their reimbursement prices to the German system. This has triggered a debate by the pharmaceutical industry on amending the AMNOG mechanism in a way that the agreed rebates, similar to the mandatory rebates outlined above, are granted directly to the SHIs, so that the actual, publicly known market price remains unaffected.

Opt-out

Generally, within a period of 14 days after the first round of negotiations with the GKV-SV, a pharmaceutical company may opt-out of the AMNOG procedure by withdrawing its product from the German market (opt-out right). This leads to a complete cancellation of the AMNOG process, and no reimbursement price will either be agreed or determined by the arbitration committee. In practice, a number of withdrawals of products for which an additional therapeutic benefit could not be established, has occurred. The reason for this is that in these cases, the reimbursement price must generally not exceed the annual costs of the cheapest comparator. If generic products are selected as comparators, the maximum reimbursement price for these innovative products is limited by this generic price level.

In this context, data published in 2017 show that the availability rate of innovative products has dropped from 98.5% to 80.24% due to pharmaceutical companies not entering the German market. Already at this point in time, a total of 28 products were no longer available on the German market.

Free pricing in first year after product launch

Then again, the pharmaceutical industry has been criticised by the SHI for setting ‘astronomically high’ prices for certain products and thereby allegedly abusing the possibility of free pricing during the first 12 months of a product’s launch (a prominent example is the launch price for the Hepatitis C drug Sofosbuvir being, when it was launched in Germany at a market price of over €700 per tablet). Against this background, the SHI is still lobbying for a restriction of the right for free pricing in year one.

Limited impact on prescriptions by physicians

Finally, it should be noted that the G-BA assessment seems to have limited influence on the prescription decisions made by physicians. Even new pharmaceuticals which have received a positive additional benefit assessment by the G-BA seem to penetrate the German market rather slowly. In fact, local and regional SHIs often put pressure on physicians not to prescribe innovative products on the grounds that sufficient medical treatment could also be achieved by prescribing less expensive generic alternatives.

Emerging trends

Under the leadership of the German Ministry of Health, a campaign called ‘Pharma Dialogue’ designed to include all stakeholders (e.g. the pharmaceutical industry and the SHI), was initiated in 2014, aiming to address problems and issues which need to be resolved in order to ensure better conditions for access to innovative pharmaceuticals. In 2018, for the first time, representatives of the governing parties of the German Parliament as well as of state parliaments participated in the Pharma Dialogue. It was discussed how to safeguard the supply of pharmaceuticals and how to strengthen the pharmaceutical industry in Germany with a focus was on digitalisation, innovative approaches and the know-how-transfer between universities and the private sector.

AMNOG reform act: New information system for physicians

With the AMNOG-reform act (‘AMVSG’), which came into effect in May 2017, inter alia a new information system is to be established aiming to provide physicians with quick and direct access to all assessments made by the G-BA. Regarding the implementation of the system, a first draft of the Directive concerning the Electronic Medicinal Product Information (‘EAIMV’) was published in October 2018. According to this draft, the software already used for prescribing pharmaceuticals, which provides information on APIs and the scope of the marketing authorisation, shall include information regarding the patient groups for which an additional therapeutic benefit may be established. The additional therapeutic benefit must be shown in connection with the appropriate comparative therapy, separated und summarised for the different patient groups.

The system will provide a concise and comprehensive summary with a maximum of 3,000 characters regarding the main grounds of the GBA’s decision on the additional therapeutic benefit. Additionally, it will show the benefits of the evaluated medicinal product for the different patient groups. However, the pharmaceutical industry is criticising the draft on the grounds that it does not take the guidelines by the medical societies into account, stressing that the decision to choose a treatment depends on more than just an additional benefit. The information system should be considered as an instrument for price control rather than prescription control.

EU harmonisation on HTA

The recent proposal for a European regulation on harmonised rules regarding HTAs by the European Commission has been intensely debated in Germany. While the national associations of the pharmaceutical industry have taken the positive view that such harmonisation could facilitate and streamline the hitherto very fragmented market access process in the EU, the G-BA has been rather critical of this for a number of reasons, including the perspective of losing its influence if the HTA process is shifted from national authorities to European institutions.

Eventually, since inter alia the German Parliament considered the approach as non-compliant with subsidiarity, it sent a reasoned opinion to the European Commission, which was found justified. The EU lacks competence for harmonising clinical assessment; it is especially not permitted to bypass Member States’ responsibility for health services by way of the internal market competence. The obligations connected to a joint assessment entail intervention in the health policies of the Member States, because the HTAs that are the subject of the legislation constitute an essential element of the ‘management of medical care’. Hence, the EU Parliament mitigated the draft in several points; it shall, for example, be possible for Member States to conduct additional HTAs, and the HTA shall not be exclusive.

The impact of the ECJ judgment regarding fixed prices for prescription-only pharmaceuticals

The judgment of the ECJ issued in October 2016, ruling that foreign mail order pharmacies are not bound by the German pricing regime, has triggered a debate as to whether the hitherto liberal German pharmacy mail order regulation can still be upheld. National pharmacists are lobbying for a ban of distribution of prescription pharmaceuticals (‘RX products’) by mail order pharmacies.

The German Federal Minister of Health published key points regarding future developments for the pharmacy market. In terms of RX products, he suggested a limited bonus of €2.50 for foreign pharmacies per pack of prescription-only pharmaceuticals, and a stronger evaluation of developments in the field of RX products, meaning that a stronger regulation could apply for foreign mail order pharmacies if their market share of RX products reached a threshold of 5%. National pharmacists especially criticised and rejected the suggested bonus system, arguing this would abolish the principle of equal prices in the German pharmaceutical market, which would jeopardise the availability of medicinal products in Germany.

Finally, against the background of the ECJ judgment, a verdict of the Federal Administrative Court is expected in terms of the question of whether the German pricing regime for prescription-only medicinal products discriminates against national, i.e. German pharmacists concerning their right to freely pursue a professional activity pursuant to Art. 12 para. 1 and Art. 3 para. 1 of the German Basic Law.

Security in supply with medicinal products

The Act for More Security in Supply with Medicinal Products (‘GSAV’), which is still at the beginning of the legislative process, has been proposed as a reaction to the recall of contaminated Valsartan products. While it focuses on supply security aspects, it also entails relevant changes regarding the additional benefit assessment and the competences of the G-BA.

First, the GSAV inter alia aims at fostering the use of biosimilars. To this end, prescribing biosimilars shall be generally considered to be cost-efficient within the SHI. Additionally, the G-BA shall be assigned new competences to publish guidelines stipulating which originators may be substituted by biosimilars. Connected to that, automatic substitution will gradually be introduced for defined biosimilars. Eventually, target agreements concerning minimum quotas for prescribing biosimilars, and for efficient prescribing on regional levels, shall be promoted.

Furthermore, the Act provides changes regarding orphan drugs. Currently, orphan drugs not exceeding a turnover of €50 million, are privileged in terms of the additional benefit assessment in that an additional therapeutic benefit will be assumed, with no need to provide further evidence in the respective dossier. With the GSAV, the G-BA can restrict the possibility to prescribe orphan drugs to certain panel doctors or other institutions which participate in data-collection programmes regarding the use of orphan drugs. This has triggered a debate whether limited access to orphan drugs may be expected with this change. Furthermore, when determining the turnover of an orphan drug, sales generated in the inpatient sector shall also be included, although reimbursement for inpatient treatment will not be subject to AMNOG prices but to the DRG system. Against this background, it is assumed that orphan drugs will exceed the turnover threshold of €50 million faster, and thereby become subject to the standard AMNOG process.

The GSAV bill also targets special pricing and reimbursement rules for medicinal products for the therapy of coagulation disorder in case of haemophilia. According to the bill, the manufacturer’s price for such medicinal products shall be oriented towards the volume-weighted arithmetic average purchase prices which hospitals and physicians have paid for these products in 2017 and 2018. The pharmaceutical companies will then have to report this price to the GKV-SV where it will be checked for plausibility. If either the pharmaceutical companies do not announce the respective average price, or the GKV-SV does not consider the reported price plausible, it may determine the future manufacturer’s price itself pursuant to the SHI-notifications.

Another aspect addressed by the GSAV is an improvement in the supply of cannabis-based medicinal products. De lege lata, such cannabis-based medicinal products are already covered by the SHI under specific conditions, although additional SHI approval is required for reimbursement. In accordance with the GSAV reform, the requirement for SHI approval will be simplified, and the process will be shortened. The overall aim is to safeguard a frictionless and continuous supply of cannabis-based medicinal products.

Finally, the bill includes an attempt to align the pricing for cytostatic treatments. Cytostatic treatments enjoy an exceptional position in the German statutory framework in that prices have, up to now, been subject to individual rebate contracts between single SHIs and pharmaceutical companies. This situation has caused significant price differences for the same cytostatic treatment, depending on the negotiating power of individual SHIs. To address this problem, the bill provides that such rebate contracts shall no longer be concluded by individual SHIs, but only SHI-overarching. It is expected that the GSAV will enter into force by July 2019.

Access to doctors’ appointments and better medical care

Especially due to shortages of vaccines in 2018, the German government is planning to reopen the market to all vaccine manufacturers and to move away from selective contracting schemes. To this end, the government issued a draft bill for the Act for Earlier Doctor’s Appointments and Better Medical Care (‘TSVG’), which is still subject to further steps in the legislative process. Under this, the government proposes to limit the SHI reimbursements for pharmacists to the pharmacists’ actual purchase price paid to the respective manufacturer. By this means, incentives to pharmacists regarding lower individual price negotiations with vaccine manufacturers will be eliminated.

Additionally, the draft bill of the TSVG includes provisions to increase the mandatory rebates for vaccines that manufacturers must grant:

First, in future, the calculation of these rebates shall be oriented towards the actual average prices in the four states of the EEA – not only the EU – the gross national incomes of which come closest to Germany’s.

As a second action, the draft bill proposes an additional rebate-surcharge for vaccines for the benefit of SHIs. For that purpose, the mandatory rebate based on the EEA reference prices shall be increased by 5% of the manufacturer’s price for vaccines in general, and even by 10% for vaccines addressing seasonal influenza. This suggestion is yet subject to criticism, as another markdown might make the German vaccine market even more unattractive for manufacturers. Thus, this measure would risk rather adverse effects instead of improving the medical supply of vaccines.

Successful market access

Even in the absence of a fourth hurdle, successful market access by pharmaceutical companies in Germany requires careful preparation and a well-structured approach. It is crucial that this process is only initiated after marketing authorisation has been granted. Market access and regulatory experts should therefore work closely together in integrated teams throughout the whole marketing authorisation application process.

To this end, the design of the pivotal trials should be discussed and structured not only with respect to regulatory and clinical aspects but also anticipating requirements for a successful additional benefit assessment under the AMNOG process. As outlined above, a high number of negative additional benefit assessments is based on the mere absence of clinical data requested by the G-BA. Such a situation can only be avoided if the market access perspective is integrated in the marketing authorisation process as early as possible.

Furthermore, close collaboration between market access and medical experts is needed in order to map out a strategy concerning the G-BA’s determination of the appropriate comparator for the AMNOG process. Given the ‘bottom-up’ nature of the price negotiation process, the determination of the appropriate comparator can substantially influence the potential for agreeing the ultimate reimbursement price.

Finally, it is important to involve internal or external legal experts at the earliest stage of the AMNOG process, given that courts are reluctant to challenge the scientific assessment made by the IQWiG or G-BA in substance. Thus, as judicial review will be limited to potential violations of procedural rules, as well as misinterpretation of substantive legal requirements, it is even more important to identify such potential legal trigger-points at the very beginning, and to integrate them in the overall process.

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